Hike in raw material prices chokes SSI units

The recent hike in the prices of pig iron, cast iron scrap and coal, the raw material for foundry and engineering industry, is taking a toll on the health of the small industries in the state.

The owners of small scale industries (SSI) units all over the state had a meeting on December 6 following which they have created an action committee.

"SSI units will be forced to close down if the prices of pig iron and coal are not controlled," an owner of a unit said.

"There is a sharp increase in the price of pig iron and coal. These raw materials are required for foundry industries and engineering products. Within a period of one year, the rate of pig iron has jumped from Rs 9,000 to Rs 16,000 per tonne and is likely to increase again in the future," said Magan Patel, president of Gujarat State Small Industries Federation.

Patel said, "Public sector units have now stopped making foundry grade pig iron as a number of private plants make it. The price charged by the private plants to the SSIs for pig iron have increased by 60 to 70 per cent."

The committee demanded that the government plants reserve at least 20 per cent of their pig iron produce for the SSI sector by curtailing their exports.

The government should prevent cartelisation of raw materials, introducing necessary statutory provisions, to reduce basic custom duty on scrap and remove anti-dumping duty on certain items, he said.

Talking to reporters here on Wednesday, Patel said, the state minister of industries Anil Patel has told them that the government would give SSI units coal at a nominal rate.

"The prices of pig iron has increased by Rs 7,500. If the price of the raw materials increases, all foundry and engineering industries will be forced to stop purchasing them," Dahya Patel, president of The Ahmedabad Engineering Manufacturers' Association, said.

"The committee has decided to stop buying raw materials unless they are supplied at a nominal cost. There are 2.60 lakh SSI units in the state. Of them, 60,000 are engineering units. If the units are closed down, around 10 lakh workers will be unemployed," Dhansukh Vora, secretary of Greater Rajkot Chamber of Commerce and Industry, said.

"At present, around 50 per cent of the SSI units have stopped working in the state," Virendra Shah, president of Odhav Industries Association, said.

The committee have decided to send its representatives to Delhi on December 22 and discuss the issues with the concerned ministers.